In 2013, at the annual Consumer Electronics Show in Las Vegas, T-Mobile CEO John Legere confidently stepped onto the stage, prepared to place a bet. But this was no ordinary Vegas gamble. It was a high-stakes wager on the future of his company—this was a Big Bet.
With a captivating blend of humor and audacity, Legere declared war on his competitors and the mobile industry’s tarnished reputation. His rallying cry signaled a radical new strategy: No Contracts. No Data Plan. No Overages. “We are the Un-carrier!” The impact was electric, igniting the audience, stirring the media, and inspiring his team back in Bellevue.
While Legere is often celebrated for his bold leadership, keen insights, and strategic acumen, his true genius lies in understanding what all leaders must do: assess their situation, recognize their strengths and limitations, and make a Big Bet when it counts.
But Legere didn’t stop there. He constructed a powerful engine capable of churning out one Big Bet after another, dubbing them “Un-carrier Moves.” Over several years, T-Mobile executed twelve Un-carrier Moves, driving more than twenty consecutive quarters of industry-leading subscriber growth, record-breaking net promoter scores, and an enterprise valuation that grew over 700 percent.
Legere was a master of Big Bet Leadership, defining and harnessing the systematic transformation of T-Mobile from a financially hamstrung, laggard, fourth-position mobile telecommunications provider to a market-leading brand viewed as the market innovator.
Legere’s Big Bet challenged the industry orthodoxy of fixed contracts, roaming fees, and data caps, but Big Bets can take many other forms. Legere’s Big Bet is just one type. Let’s identify the other common types of Big Bets our playbook is for:
First, there are go-to-market and brand repositioning initiatives. These are fundamental repositionings of a product or service within the marketplace, such as the T-Mobile Un-carrier announcement.
Second, there are digital transformations. A digital transformation is the integration of digital technology into all aspects of a business, fundamentally reshaping how it operates and delivers value to customers, with a focus on improving efficiency, innovation, and the customer experience.
Third, there are innovation programs, which are a systematic approach to incubating transformative new businesses and product line extensions. When a concept from the innovation program involves a significant change or investment, it is a Big Bet.
Fourth, there are technology platform investments. Often there is a thin veneer of a business change and justification, but at their core these are 80 percent major system overhauls, upgrades, and transitions.
Fifth, there are operating model transitions. An operating model is a framework outlining how an organization aligns its resources, processes, and technologies to deliver its value proposition to customers effectively and to achieve its strategic objectives. When the operating model involves a significant change or investment, it is a Big Bet.
Sixth, there are mergers and acquisitions. Both pre-deal diligence and post-transaction merger-integration programs are typically Big Bets because there is a clear thesis for benefit.
All of these Big Bets are connected by these realities: they almost always underdeliver in benefits, take longer and cost more than planned, and oftentimes are considered failures.
Why Big Bets Fail
An examination of the data suggests that the likelihood of John Legere successfully executing even one Big Bet was slim, let alone a series of them in rapid succession. Digital transformations, operational shifts, product launches, innovation initiatives, large-scale technology migrations, mergers, and other Big Bets suffer a staggering failure rate of over 70 percent. Every piece of research we’ve examined converges on a similar finding—substantial and critical transformations are typically considered failures:
- “An alarming 73% of enterprises failed to derive any business value from their digital transformation, and 78% fell short of meeting their business ”
- “89% of companies have launched a flavor of digital, But they only captured 31% of the expected revenue lift and realized just 25% of total cost savings.”
- “According to most studies, between 70 and 90 percent of acquisitions ”
- A study of 1,471 IT projects revealed that while the average cost overrun was 27%, an alarming one in six projects experienced overruns of 200% and were delayed by 70%.
The true hazards of such major initiatives stem not just from the high likelihood of underperformance or budgetary excesses, but from the genuine risk of colossal failure. One global expert on megaprojects, Bent Flyvbjerg, notes that “In total, only 8.5 percent of projects hit the mark on both cost and time. And a minuscule 0.5 percent nail cost, time and benefits.”
Is there hope?
Our responsibility is to learn from both legends and failures, proactively sidestepping the many pitfalls, enabling our organizations to confidently pursue innovations, technology initiatives, digital transformations, and operational adaptations that drive exceptional financial results and a formidable competitive edge.
John Legere isn’t alone. There are a few leaders who have proven an ability to systematically beat the dismal odds of getting Big Bets right. Leaders like Jeff Bezos, Elon Musk, and Satya Nadella repeatedly succeed at Big Bets and then can take on more of them, while other leaders roll the dice and fail more often than not. Studying the leadership styles of these Big Bet legends offers lessons and makes it clear that they act in ways that Big Bet losers do not.
Imagine possessing a leadership playbook akin to a mystical codex, filled with insights empowering the holder to conquer complex problems, challenges, and transformations and avoid the traps and enemies hidden on the path to treasure. If you could have a map illuminating your path, steering you through perilous journeys, and pushing you up to the limits of your company’s potential, teaching you how to compete and win in the next era of competition and hyper-digital companies, would you pay attention? Would you be willing to reconsider the dogma of traditional management practices?
Solving Wicked Problems
The CEO of a company has a unique perspective and obligation. Their viewpoint is based on seeing the world and their business through the lens of risk. The CEO job is to always scan for the enterprise risks that might threaten the organization—competitive, capability, capital, cyber, reputation, regulatory, and legal. More than ever, there is the existential risk that disruptive technologies and artificial intelligence represent to products, services, operations, and business models. Responding to these risks and complex problems is what drives the response—the strategy, the transformation, the initiatives.
Risks are often both threats and opportunities. Big Bets don’t stem from simple or predictable problems and challenges. Big Bets are a response to multi-sided, complex, and difficult-to-predict problems with many facets to them. These are often referred to as wicked problems.
A wicked problem is a complex situation that is difficult to define, unique, has multiple constraints, has no universally agreed-upon solution, and is one in which solutions are difficult to test. Wicked problems can happen at any level of the enterprise, from an all-encompassing situation, such as a business turnaround or digital transformation, or at a functional or department level, such as a legacy core technology platform transition or a supply chain transformation. In his seminal book Good Strategy/Bad Strategy: The Difference and Why it Matters, Richard Rumelt argues that a good strategy is a coherent set of actions designed to address a challenge or a specific complex problem, while a bad strategy is an ambiguous or incoherent plan either not attached to a specific challenge or one that fails to confront or resolve the crux of a problem. Good strategy is marked by a kernel consisting of three elements: a diagnosis, a guiding policy, and a set of coherent actions.
Our book, Big Bet Leadership builds off Rumelt’s work, giving a structured collection of guidelines, strategies, and tactics that will assist organizations and executives in achieving specific goals and solving wicked problems. This playbook provides a structured and paced approach to problem-solving and decision-making, outlining innovative practices, key principles, and practical steps. The playbook includes identifying the core issue or challenge, a generalized principle in approaching and solving the challenge, and tactics to demonstrate a path to action. This guide develops not just a good strategy for wicked problems, validating the riskiest parts of the strategy from the inception and setting up the effective transition to strategy execution, but also addresses the most significant risks and challenges in executing this strategy.
It is when attempting to solve these difficult challenges, in these calculated moments in which a path is chosen, where management either prove their mettle or set out upon another foolish journey. In all cases, Big Bets have material risk. And in most cases, they fail. Yet these are the Big Bets we must make. The mission of Big Bet Leadership is to help you mitigate the risks while maintaining the ambitious goals that motivate you to transform.
Contributed to Branding Strategy Insider by John Rossman and excerpted from his new book, Big Bet Leadership: Your Transformation Playbook for Winning in the Hyper-Digital Era, an actionable playbook for senior leaders to succeed at complex transformations.
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